Ambito Finnciero – The withholding on exports will be the help wheel for the Minister of Economy, Martín Guzmán, to achieve the goal of the fiscal deficit of 4.5% for next year, according to private analysts. The explanation is that the pandemic will cause an increase in the price of raw materials at the international level when conditions improve and this will be reflected in the coffers of the Argentine State through taxes on foreign trade.
This was stated by Walter Morales, director of the WISE consultancy, and Diego Piccardo, economist at the Fundación Libertad y Progreso.
In this regard, Morales pointed out that “the element to take into account” to see the collection numbers for 2021 “is the feasibility of the prices of raw materials trading at higher than current values.” “As the world economy is recovering in a context of extremely high liquidity, rates close to zero and the dollar falling, it is expected that the prices of commodities exported by Argentina will increase in price,” he explained in a report.
The economist pointed out that “the fiscal situation is not necessarily going to lead to an accelerated inflationary process, at least in the short term.” On the contrary, he considered that an increase in prices at a lower rate than expected is to be expected for the remainder of this year and the next.
Given the announcement by the Minister of Economy, Martín Guzmán, that the next budget will include a fiscal deficit of 4.5% of GDP, the director of WISE described it as a “pseudo cut in public spending” because in his opinion “it will be a gradually return to the pre-quarantine level ”. Morales also indicated that a decrease in the deficit is expected due to an increase in collection because “the economy has hit the bottom” and because “it is to be expected that the moratorium will have a high adherence due to its broad scope and benefits.
So far in 2020, withholdings on exports contributed $ 233,214 million out of a total collected by the AFIP of 4 billion, that is, they contributed 5.28% of tax revenues. In 2021 that proportion will go up. The economist of the Fundación Libertad y Progreso, Diego Piccardo, agreed with the forecast that an improvement in withholdings may come due to the increase in the prices of raw materials, although with some limitations. It will not be the scenario that existed between 2007 and 2009, when soybeans reached maximums of up to $ 500 per ton. “It will not be similar to the values of that moment. In those years there was a super demand for raw materials from China that now is not going to be, “he said. In principle, the rise that commodities may have will originate in financial movements, from investors who will escape interest rates and will play an opportunity in grains. “We can see an increase in raw materials but not of that dimension. That can be seen in higher income from export duties and the Treasury will have more resources, “said the economist. According to INDEC data, up to July Argentine sales abroad totaled US $ 32,291 million, down 11.9% compared to 2019. Much of the recovery for next year will be a price effect.
On the other hand, Piccardo clarified that “when the economy begins to rebound there will be a recovery in the collection of cyclical taxes, which are VAT and Income Tax.” Both taxes are the pillar on which the entire income scaffolding of the national treasury is supported. Piccardo considered that this “will facilitate the goal of 4.5%” set by Guzmán. On the other hand, he estimated that to a lesser extent the activity of the people who were unemployed during the quarantine and who will start working again will contribute to the collection. In another aspect, he conjectured that the fiscal deficit goal proclaimed by the head of the Palacio de Hacienda is a “ceiling” looking at the negotiation with the International Monetary Fund (IMF). He believes that it is likely that the multilateral body will ask for a slightly tougher adjustment and that Guzmán would already be contemplating that alternative in the tax reform that he plans to send to Congress, where there will surely be some new increase in the tax burden.
By Carlos Lamiral